Aug 25, 2021
What happens when an executor is also a beneficiary?
An executor simultaneously being a beneficiary of that same estate is more common than you may think.
As an estate executor, you’ve got a lot on your plate: You need to go through the deceased’s personal belongings, make an inventory of their assets, most likely apply for probate and go through the whole probate process, and deal with the grief that comes with losing a loved one. So if you add difficult beneficiaries on top of all that, you’re looking at a very long, very expensive, and very unpleasant estate settlement process.
Thankfully, we’ve got some tips on how to deal with difficult beneficiaries and avoid all that unnecessary drama in the first place.
We regularly share relevant information about wills and estates.
A big issue that pops up over and over again is a misunderstanding of how long it actually takes to settle an estate. People underestimate how long it takes to go through probate: In Ontario, probate can last up to 6 months under normal conditions. And now, because of COVID-19, a wait of up to ten months isn’t unheard of.
Beneficiaries might think that once the will is submitted and approved, their inheritance will show up in their bank accounts in no time. It’s really important to manage expectations from the very beginning and make sure everyone understands that it will take several months to almost a year before the beneficiaries see even a cent of their inheritance. Be upfront and tell any beneficiaries that they should definitely avoid spending money they don’t physically have yet.
You might not think twice about only checking in a couple of times with the beneficiaries before everything is finalized and the estate has been settled. But for beneficiaries, this could read as a huge red flag. Put yourself in their shoes: They have no idea what’s going on. They don’t know that you’re waiting to hear back from probate court, or that you’re currently in a heated back-and-forth email exchange with an appraisal specialist, or that you’re stuck in bureaucratic hell because no one told you you needed to submit that one form three times to three different offices. They just feel like the person entrusted with managing their inheritance has gone MIA.
Being open with beneficiaries and checking in with them as much as you can will lend transparency to an often nebulous process and solidify trust. Tell them if you’re encountering obstacles such as a delay in selling property or other estate assets. Explain the next steps you’ll be taking. Beneficiaries will appreciate you letting them in on the process and keeping them informed.
Perhaps it makes total sense to you that you have certain rights and obligations as an executor, including the right to liquidate assets, use funds in the estate to pay for bills, or even that executors are entitled to compensation. But it’s very likely that the beneficiaries don’t know this. You’ll save yourself and them a lot of headaches down the line if you sit them down at the beginning of the settlement process and explain to them exactly what you, as an estate executor, are entitled to do and why.
You might be grieving, but so are they. Perhaps you’re trying to pay off debt by selling off some of the estate’s items, but a few of the objects may have immense sentimental value for one of the beneficiaries. Make sure to check in and ask what items they’d want to keep and what is important to them. Better yet, have them sign off on a liquidation plan. Try to remember that everyone is dealing with a lot of intense emotions, and sometimes, mistrust so be compassionate of their grieving process.
It’s an awful feeling if a beneficiary loses trust in you and starts questioning your role in the process. This can get particularly dicey if you’re getting compensated for your duties through the estate. In order to avoid any further tensions, make sure you keep meticulous records of everything—we’re talking every request sent to officials, every list drawn up of assets, every receipt, every email, every communication with banks and insurance agents. Make notes after any phone calls you make or receive. The more detailed your notes, the more you can reassure beneficiaries that you’ve done due diligence throughout the entire process.
If this sounds incredibly tedious, then we’ve got some good news: ClearEstate makes it incredibly easy for you to create full transparency for all beneficiaries involved. With the help of ClearEstate’s beneficiary portal, you can ensure that all beneficiaries are able to view the progress of the settlement, receive a summary of what assets they’re entitled to, and keep detailed records of all communications. Building trust and maintaining transparency is key for a smooth process.